How new workplace reforms will force employers to think differently in 2026

In 2025, the rules of employment are changing fast, so employers can no longer rely on old assumptions. That was the theme of our recent HR Hotspots briefing, which we co-hosted with Brown Wright Stein Lawyers.

From redundancy and redeployment to restraints and remuneration, 2025’s biggest cases and legislative changes (both potential and already passed) are forcing HR leaders to rethink how they manage people, processes and risk.

1. The Redundancy revolution: A deeper inquiry regarding “redeployment”

One of the key issues discussed at the HR Hotspots briefing was recent changes to redundancy law – and especially the redeployment requirements in the Fair Work Act.

Until now, most organisations have treated redundancy as a simple two-step test: confirm there’s no available position and ensure consultation obligations were met.

That’s no longer enough after the High Court decision in Helensburgh Coal Pty Ltd v Bartley [2025] HCA 29.

The High Court’s decision means that the Fair Work Commission (FWC), will now be taking a broader, updated approach to whether or not it would have been reasonable in all the circumstances to redeploy someone before ending their employment, on grounds of redundancy.

This includes looking beyond vacant roles in which the redundant employee could have been deployed, to actively examining whether an employer could have created or made available a suitable role by adjusting existing workforce arrangements.

From now on, employers are expected to consider:

• Roles currently performed by contractors or labour-hire staff. The FWC will now look at whether contractor roles could reasonably have been insourced and reassigned to existing employees.
• Foreseeable vacancies or workforce changes. Companies may have to consider short-term gaps (like upcoming retirements, parental leave or contract expiries) as potential redeployment opportunities.
• Retraining and reasonable adjustments.  The FWC will assess whether retraining could have equipped an employee to step into another position, particularly where skills are transferable or the learning curve is manageable.

In short, redundancy decisions will now face a broader and more forensic test in relation to redeployment that looks at the entire workforce ecosystem; the “no vacancy” defence will no longer safeguard against unfair dismissal findings.

Our take: Catalina and Brown Wright Stein Lawyers

As our Founder, Merilyn Speiser and Dean Schubert, Partner at Brown Wright Stein Lawyers, told the audience, all employers should be looking to front-end their risk assessment process prior to implementing any proposed restructure, to build redundancy review templates, and develop redeployment checklists that call for a deeper inquiry in relation to redeployment options, consistent with the recent High Court decision.

Also, keep detailed notes of contractor usage and outsourcing arrangements, and vacancy forecasting. If an employee is unable to be saved by way of suitable redeployment, make sure your reasoning is explicit, documented and defensible.

2. Set-off clauses suffer a setback

A lot of employers have been relying on “set-off” clauses in employment contracts, including to simplify compliance with modern awards.

The logic of set-off clauses is that if a salaried employee’s total pay is high enough to cover all potential entitlements (such as overtime, penalties or allowances), the employer should be able to balance any “overs and unders” at the end of a quarter or even across a full year.

That approach is now on shaky ground.

Recent Fair Work interpretations confirm that set-off arrangements must align with the timing of award payment pay periods, not long accounting periods.

This means you can’t simply pay an annual salary and argue that, “on average” it exceeds award minimums. Each weekly or fortnightly pay cycle must, in itself, satisfy the relevant award obligations.

If an employee’s contract assumes flexibility (e.g. working longer hours during peak periods) you’ll need to demonstrate that the salary still compensates them adequately within each pay period. If not, you may face pay-back claims, civil penalties and reputational risk.

Our take: Catalina and Brown Wright Stein Lawyers

Annualised salary models and set-off arrangements aren’t dead yet, but they need to be watertight.

So we recommend you treat this as an opportunity to modernise your pay frameworks. Audit your salaried workforce to identify which roles are Award covered, check contracts for outdated wording and review your payroll systems to make sure you’re meeting record-keeping requirements.

Above all, get professional advice. As BWS Lawyers’ Dean Schubert noted during the briefing: “This isn’t just about compliance; it’s about timing. Employers who can’t show that their pay aligns with the award each pay period could be in trouble”.

3. Fixed-term frenzy

Since December 2023, employers have faced strict limits on how long they can engage someone on a fixed-term basis. Under the Fair Work Act amendments, a fixed-term contract can now:

• Run for a maximum of two years
• Be extended only once within that period, and
• Not be rolled over to avoid ongoing employment obligations.

If an employer breaches these rules – for instance, by re-signing someone to a third contract or letting a contract roll past its two-year mark – that person is likely to be automatically treated as a permanent employee, with all the entitlements that status brings.

While there are some limited exemptions, many of these were temporary and are set to expire next week on 1 November 2025 (e.g. for NFPs, athletes and public hospital staff).

The intent behind the reform is clear: to reduce “permanent insecurity” and stop employers from using fixed-term contracts as de facto probation periods.

But the practical challenge for businesses could be significant. Many roles legitimately require flexibility, including grant-funded projects, time-limited roles or parental-leave backfills.

Our take: Catalina and Brown Wright Stein Lawyers

Now is the time to audit your fixed-term workforce and plan ahead.

• Identify who’s on a fixed-term contract and when those terms expire.
• Review whether a genuine exemption applies, and when it ends.
• Look at where roles are likely to continue beyond two years and begin transitioning them into permanent arrangements or redesigning them to comply.
• Document the business rationale for each renewal and keep evidence of any funding or project-based justification.

As Merilyn Speiser told the audience: “If a position still matters after two years, it’s not really temporary. Get ahead of that conversation now before the law catches up.”

4. Non-competes on notice

For decades, non-compete clauses have been a standard fixture in employment contracts and a way for businesses to stop departing employees from walking straight into a competitor’s arms. But that era is almost over.

The Federal Government has confirmed its intention to ban non-compete clauses for employees earning below the high-income threshold (currently $183,100), with legislation expected in early 2027.

The reform is designed to promote mobility and competition by removing what policymakers see as an unnecessary restraint on workers’ right to earn a living. And its effects will be far-reaching.

Once the changes are in force, non-compete clauses will be presumed void and unenforceable. Courts will no longer uphold restrictions that prevent a person from taking a job where their only “advantage” is their skill, knowledge or experience.

That doesn’t mean employers are left unprotected. Three key restraint types will more than likely remain valid:

• Confidentiality clauses which prevent disclosure or misuse of proprietary information
• Client non-solicitation clauses which stop former employees from poaching customers, and
• Co-worker non-solicitation clauses, which prevent staff from recruiting colleagues to a rival firm.

Our take: Catalina and Brown Wright Stein Lawyers

All employers will ultimately need to audit their contracts to find out whether they have non-competes with employees who fall below the income threshold. If you find you do, it may be that they are no longer enforceable once the changes are legislated, unless they are solely focused on confidentiality and non-solicitation.

This means that securing your IP will fall more to your off-boarding processes, which should be tight enough to ensure departing employees return all confidential material and understand their obligations once they’ve left.  And of course ensuring that customer relationships are maintained within your business.

As Merilyn Speiser told the HR Hotspots audience:

“If the only way someone can use their skills is at a competitor, a court won’t stop them. The future is about protecting relationships and information, not restricting opportunity.”

5. Everyday HR watchpoints

Not every workplace change is headline-grabbing, but it’s often the smaller shifts that catch businesses out. From casual conversion requests to Christmas parties and ChatGPT, these are the everyday areas where HR teams need to stay alert in 2026.

Casual conversion: A matter of choice

When casual conversion laws first landed, many employers feared a tidal wave of requests from casuals wanting permanent status. That never quite eventuated: eight months in, the FWC reports minimal disputes, suggesting most casual employees are still choosing flexibility over permanence.

But that doesn’t mean you can necessarily relax. The rules still require employers to respond in writing within 21 days of receiving a request to convert, and to justify any refusal on limited, objective grounds (such as ongoing uncertainty about work hours or future business needs).

Right to disconnect: Still finding its rhythm

The much-discussed Right to Disconnect laws are officially in force (August 2024 for most employers, August 2025 for small business). But despite the hype, the new rules don’t actually prohibit employers from contacting staff outside hours, they simply give employees the right to ignore those communications if they are deemed to be unreasonable, in all the circumstances, without repercussions.

In practice, it’s about boundaries and reasonableness. Calling someone at 8pm over a genuine emergency will rarely be a breach but expecting instant responses to routine emails might be.

Christmas parties: Avoiding a Coldplay conundrum

It’s a perennial HR topic, but the guidance remains the same: fun doesn’t excuse poor judgment.

The HR Hotspots session coined it memorably – “avoid a Coldplay conundrum” – referring to those post-party situations where an organisation’s tone, policies or leadership silence turns a festive night into a legal headache.

To be safe, we recommend you take the following steps before this year’s Christmas party:

• Announce a firm end time and clearly separate any “kick-ons” from official functions.
• Avoid open bars and communicate behavioural expectations before the event.
• Apply standards consistently across all levels, including senior staff.
• Send a short “thank you” and reminder note the next day to close the loop.

The goal isn’t to over-regulate fun, it’s to prevent preventable issues and protect both culture and reputation.

AI in the Workplace: Embrace with boundaries

Artificial intelligence is now embedded in many workplaces, from drafting proposals to analysing data. Yet as the HR Hotspots panel noted, few businesses have formalised their approach.

In tech and professional services, AI is widely used, but often without clear rules around confidentiality, verification or accountability. As we discussed at the seminar, every organisation should now have a simple AI policy that answers four questions:

1. When is AI use encouraged?
2. When is it restricted (for example, HR or disciplinary decisions)?
3. What constitutes responsible verification before information is shared?
4. What happens when the rules are breached?

Our take: Catalina and Brown Wright Stein Lawyers

Train staff on how to use AI productively, safely and securely – not just cautiously. The future of compliance will reward responsible experimentation, businesses that combine innovation with integrity, while ensuring safe and secure use by employees.

The bottom line

Whether it’s redundancy, restraints or right-to-disconnect, one theme runs through all the 2025 reforms discussed at the HR Hotspots seminar: reasonableness.

Employers are being asked to show that they acted fairly, transparently and with genuine consideration for their people, not just that they ticked a compliance box.

Those who prepare early, document decisions and communicate openly will find these changes easier to navigate. Those who wait for a claim or audit to test their processes may find themselves learning the hard way.

Want more?

If you’d like to know more about how any of these issues impact your workplace, get in touch.